Subsidies offset deductible, co-pay costs

More than half of the people who signed up for coverage via Connect for Health Colorado will save thousands on out-of-pocket costs through federally funded cost-sharing subsidies meant to further ease the insurance burden on low-income populations.

These subsidies are in addition to premium tax credits, which help low-income populations offset the cost of premiums. Instead, the cost-sharing subsidies are meant to help with deductibles and co-pays, according to Healthcare.gov. The subsidies are only available for silver-tiered plans, which offer 70 percent coverage.

Fifty-nine percent of people who used the exchange qualified for these subsidies, said Ben Davis, spokesperson for Connect for Health Colorado.

The subsidies vary depending on a person’s or family’s income level. In Colorado, for households making from 138 to 200 percent of the federal poverty level, two-thirds of the maximum out-of-pocket cost will be paid by the subsidy. For households making 200 to 300 percent of federal poverty level, out-of-pocket costs can be reduced by half, and those making 300 to 400 percent of federal poverty level can get one-third of the maximum out-of-pocket cost paid.

In 2014, 138 percent of the federal poverty level for a family of four is about $33,000 per year. Households making less than that qualify for Medicaid.

New data from the Robert Wood Johnson Foundation show that the maximum out-of-pocket cost for a silver plan for an individual in Colorado ranged from $3,650 to $6,350 a year, but cost-sharing subsidies could reduce that cost to $1,241 to $4,255, depending on income and plan purchased.

For families, maximum out-of-pocket costs for silver plans in Colorado ranged from $7,300 to $12,700, according to the foundation. With subsidies, this could be reduced to $2,482 to $8,509, again depending on income and which plan was purchased.

Keeping out-of-pocket costs in check for low-income populations is important for ensuring that those populations actually use the health insurance they’ve purchased, said Adam Fox, director of strategic engagement at Colorado Consumer Health Initiative, a Denver-based organization focused on affordable health care for Coloradans that has supported the Affordable Care Act and Connect for Health Colorado.

“Even when people have insurance, they often forgo care if the feel they can’t afford the out-of-pocket costs,” Fox said. “We hope that (cost-sharing subsidies) are sufficient to help people get care at a reasonable cost, though there will be people who don’t feel they’re sufficient.”

Most people who enrolled in coverage via the exchange haven’t yet used their plans, said Karen Spink, assistant director of the Health District of Northern Larimer County, so there isn’t yet any data on how effective the subsidies have been in getting low-income populations to the doctor.

Before the Affordable Care Act was implemented, said Spink, it was clear that high out-of-pocket costs could keep people out of the doctor’s office even if they had coverage.

Coverage was kept for emergencies, but wellness checks and physicals, as well as doctor visits for more minor ailments such as colds or acute infections often went by the wayside as policyholders shied away from co-pays, especially as disposable income fell off during the recession.

The subsidies, while helpful to the low-income populations they serve, add significantly to the cost of the Affordable Care Act for the federal government. The Congressional Budget Office estimates that the direct and indirect costs combined will be $358 billion between 2010 and 2019.

Molly Armbrister covers real estate, banking and health care for the Northern Colorado Business Report. She can be reached at 970-232-3139, marmbrister@ncbr.com or twitter.com/MArmbristerNCBR